Time for your cheat sheet on this week’s most important stories.
Canadian Real Estate
National Bank Of Canada Forecasts Sharpest Real Estate Price Decline Ever
One of Canada’s Big Six banks sees this real estate correction being the largest correction ever. National Bank of Canada is forecasting prices will decline 9.8% from late 2020 to 2021. Prices dropped just 6.3% during the Great Recession in 2008. The largest previous drop was during the 1981 recession, where prices dipped 9.2%. The bank specified more overvalued markets will obviously see larger corrections.
Almost 20% Of Canadian Homeowners Nearly Maxed Out HELOCs Before The Pandemic
Canadian homeowners pushed home equity line of credit (HELOC) balances to the limit. There was $206 billion of HELOC credit outstanding in Q4 2019, about 35% of the total available. Bank of Canada staff determined 17% of accounts in Q4 2019 tapped between 90 and 100% of available credit. This is a substantial number of households with credit maxed out immediately before an economic shock.
Job Losses Climb In Toronto And Vancouver, While Unemployment Rate Hits Record
Canada’s largest real estate markets are seeing job losses rise to levels not seen in a very long time. Toronto’s rate of unemployment reached 11.2% in May, up from 7.9% just a month before. In Vancouver, the rate reached 10.7% in May, up from 7.5% the month before. As bad as those numbers are, total labour utilization in both regions dropped, making the numbers look better than they actually are.
One In Five Canadian Households Only Have 2 Months Of Mortgage Payments Saved
A large segment of Canadians only have enough to cover a few months of mortgage payments. Bank of Canada staff estimates 20% of households can make 2 months of mortgage payments or less, without income support. They also further add less than a third of households could make four months of payments. The bank assumed no other debt was being carried by the households, which means this may be a generous estimate.
US Real Estate
The US Gets Fastest Recession Declaration In History
NBER, an elite group of American economists that call the top and bottom of the business cycle, made an unusual decision last week. Instead of waiting for two consecutive quarters of negative GDP data, they concluded economic indicators had deteriorated enough to declare the United State in a recession. On a monthly basis, the organization concluded the economy peaked in February. On a quarterly basis, the economy peaked in Q4 2019. This marks the end of 128 months of expansion – the longest expansion in American history.
Global Real Estate
World Bank Expects The Largest Globally Synchronized Recession In History
World Bank is forecasting the largest globally synchronized recession in history. This year 92.9% of economies are expected to enter a recession, a decline in per capita GDP. This is higher than the previous record of 83.8% of economies, set during the Great Depression in the 1930s. The organization expects the negative indicators to bottom next year, but also sees it taking many years to get back to where the global economy was last year.
Like this post? Like us on Facebook for the next one in your feed.